Comments on No Debt MBA: Debt boosts self-esteem??

I can definitely see kids with higher self esteem ...

2011-07-03T11:43:01.992-07:00

I can definitely see kids with higher self esteem taking on more debt. I feel like I tend to worry more and second guess myself on whether I'm making the right decisions, whereas a kid who thinks "of course I can handle paying off debt" is more willing to get into more of it.

Then again, I also wonder if it makes kids feel more "grown up" to have their own credit card and being "paying" for their own college (although until your student loans are paid of, really department of education paid for your college...)

I like your analysis of this study. We will never ...

2011-07-02T08:10:49.706-07:00

I like your analysis of this study. We will never know the causality of debt and self-esteem, but I like your idea that perhaps the students with higher self-esteem and/or more confidence are more willing to do something "rash" like take on consumer debt. Sometimes, in money, a healthy dose of pessimism can be good.

Thank you for pointing out the it was correlation ...

2011-07-01T11:41:18.741-07:00

Thank you for pointing out the it was correlation not causation. I have been seeing this study around and having people seem to have no idea about the difference has been driving me nuts. Again, thanks.

Weird- maybe being in debt is typical of young adu...

2011-06-28T11:37:43.144-07:00

Weird- maybe being in debt is typical of young adults, and they pride themselves on being just like everyone else?

We are wonder if this info can be used to screen l...

2011-06-28T06:34:37.901-07:00

We are wonder if this info can be used to screen loan applicants. The lower self esteemed folks, may be better at handling debt so they should be given the best rates.

I just read the full study and your conclusions ab...

2011-06-27T09:06:27.105-07:00

I just read the full study and your conclusions about their methods are way off. Not surprising as most people don't know much about how research is done. In any case, your concerns:

1) Controlling for debt--they did this, why do you think they didn't? The survey was randomized, there were a huge number of respondents from different demographics and some had debt and some didn't, and in between. In this case the respondents are the children of a national 1979 survey, so they were easily able to control for the parents' demographics too.

2. Correlation vs causality--their statistical methods are robust for correlation (ANOVA and chi-squared) AND causality (multiple regression). If you don't understand the math it can be confusing, but basically you compare different variables and factors in isolation and see how they affect each other. If you talk to the respondents at different points in time (as they did, these exact same respondents are tracked over time) you can see trends. In any case, YES, they did find causality, without a doubt. The effects were different for different demographic groups but the numbers are there. Sometimes research findings are surprising or unexpected...but that's why we do it.

The authors intend to repeat the study to see how these same people feel about their lives as they get older:

"The finding that negative effects of debt begin to emerge among the oldest respondents in
the sample suggests it will be very important to continue to follow the experience of debt among this crucial cohort of young
adults focusing not only on self-concept but also broader outcomes such as mental health, status attainment, and wealth
accrual."

The pride idea was what I was thinking too. It doe...

2011-06-25T08:07:04.723-07:00

The pride idea was what I was thinking too. It doesn't really go into how they measure self esteem. The whole 'I deserve it because I'm me' mentality is what lands people in consumer debt issues to begin with.

I'd think that it's pride that leads us to...

2011-06-24T18:26:10.503-07:00

I'd think that it's pride that leads us to dig ourselves deeper into debt, giving a false since of "higher self esteem". In reality, it stinks!

Interesting article. I'm leaning toward your ...

2011-06-24T17:32:04.846-07:00

Interesting article. I'm leaning toward your theory that it's the other way around. Higher self esteem (ballsy) people take on more debt. I wonder if this info can be used to screen loan applicants. The lower self esteemed folks, may be better at handling debt so they should be given the best rates. High self esteem folks, may be more of a risk. Similar to auto insurance screening for loans. Higher risk, higher premiums, higher rates, and higher qualifications.